Lee BranstetterNicholas LardyJuly, 2006

NBER working paper:China’s Embrace of

Globalization

输入标题输入标题

Abstract

•Attempt to provide the international economics community with a brief summary of the major steps in the evolution.•On Chinese policy toward international trade and FDI and their consequences since the late 1970s.•Draw upon and update treatment of the subject.

Background of China’s Economic Growth

• 1978: started open market to foreign trade and investment (economic reform)--$21 billion foreign trade.

• 2004: $1.1 trillion• 2005: world’s third largest trading economy

Study focus on1978-2001Chinese trade and investment policy

Prior to WTO Accession

• Before: planned economy, state commission’s plan covered more than 90% of imports, 3000 individual commodities to export. Few foreign trade corporation owned and controlled by the Ministry of Foreign Trade.

• Chinese volume of trade: 1.5 percent in 1953 to 0.6 percent in 1977.

Prior to WTO Accession (cont.)

• Reduce import tariff: 56% in 1982, 43% in 1985, certain categories of domestic firms were duty free in the second half of the 1990s.

• Licenses and quotas: half of imports by end of 1980s.

• Increased domestic firms: 12 firms to 800 firms by 1985, to 35,000 by 2001.

• Foreign exchange reform and Tax policy: RMB 1.5 to the dollar in 1981 to 8.7 in 1994, rely on indirect tax.

FDI Prior to WTO Accession

• 1979: Law on joint ventures was passed Four special economic zones • 1984: 14 additional units (opened cities)

on Pacific coast.• 1986: 22 regulations for “export

oriented” projects and “technologically advance” projects

China’s WTO Accession Agreement

• Trade in Manufactures: agree to lower average tariff levels on

industrial products to 8.9% in 1999---Phased in mid-2005.

Retain state monopoly: petroleum products, cotton, grain, vegetable oil, tea, silk.

Right to import and export to all firms active in China: foreign and domestic

China’s WTO Accession Agreement

• Agricultural Trade: reduce the average statutory import tariff

from 21% to 15%. Agreement on WTO Sanitary and

phytosanitary standard to avoid health standards problem. 100 more health standards.

China’s WTO Accession Agreement (cont.)

• Services Sector: significant in distribution,

telecommunications, and financial services. also for professional, audiovisual, and

construction services open its market in banking, insurance,

securities, fund management, and other financial services (fully opened after 5 years)

Implication

• Structure change: China: leading exports of crude oil, refined petroleum products and apparel to a major producer and exporter of electronic and information technology products

• Reduces the exports of Vietnam, the Philippines, Thailand, Indonesia, and Malaysia. ASEAN exports drop.

• Benefit Japan and the NIES, mainly due to increased exports to China

QUESTIONS